Consol Energy selling half its Marcellus rights for $3.4B

Email Newsletters

On the Grid

From the shale fields to the cooling towers, Trib Total Media covers the energy industry in Western Pennsylvania and beyond. For the latest news and views on gas, coal, electricity and more, check out On the Grid today.

Daily Photo Galleries

Business Photo Galleries

Traveling by Jeep, boat and foot, Tribune-Review investigative reporter Carl Prine and photojournalist Justin Merriman covered nearly 2,000 miles over two months along the border with Mexico to report on coyotes — the human traffickers who bring illegal immigrants into the United States. Most are Americans working for money and/or drugs. This series reports how their operations have a major impact on life for residents and the environment along the border — and beyond.

By Timothy Puko

Thursday, Aug. 18, 2011

Consol Energy Inc. shareholders should see a quicker return on their investment because of a $3.4 billion joint venture announced today to help ramp up the company's Marcellus shale production, executives said.

Houston-based Noble Energy Inc. will buy half of Consol's Marcellus development rights and existing wells in Pennsylvania and West Virginia.

The deal comes a little more than a year after Consol tripled its gas land holdings with an acquisition from Dominion Resources Inc., and the joint venture is designed to help the Consol drill all of that land, said Randy Albert, chief operating officer of the company's Energy Gas Division.

"We looked at what we had, all 750,000 acres, and there were places we wouldn't get to in the next 20 years," Albert said in conference call. "We just felt it was in the best interest of our company and shareholders. … We don't believe in pushing off the value of those assets to the next generation."

Consol is withholding some of its gas land in Ohio, so the deal involves 663,350 acres — and rights only to the Marcellus layer — in Pennsylvania and West Virginia. The joint venture will concentrate on developing three areas: Westmoreland and Indiana counties, Greene and Washington counties, and Marshall and Barbour counties in West Virginia, Albert said.

Noble Energy will be especially helpful in the West Virginia counties, which hold "wet gas," he added. Wet gas is a mixture of several different hydrocarbons that can be separated and sold, but Consol hasn't worked with those operations before. The expansion in West Virginia will be its first, Albert said.

"We were very excited about bringing a partner in that had expertise in handling liquids," he added.

Consol plans to double its Marcellus well rig count from four to eight this year, with plans to increase to 12 rigs by 2013 and 16 by 2015. Each rig has about 50 workers, but officials said they were not sure how many total jobs the expansion will bring to the region. Consol will be part of efforts to help train a new wave of Marcellus laborers, said spokesman Tommy Johnson.

"We're going to be the face of production here," he said. "So in terms of employment and capital allocation, that's going to be driven by Consol."

The deal is expected to close on Sept. 30 and includes $1.07 billion for 50 percent of Consol's undivided interest in Marcellus shale acreage. The bulk of the deal will see Noble pay $2.13 billion to help fund ongoing development, Consol said.

Noble Energy will also pay $160 million for existing Consol Marcellus wells and another $59 million for 50 percent interest in Consol's pipelines connecting the wells to interstate gas transmission pipelines. The company is likely to invest that money into further expansion, officials said.

"Noble Energy is excited to be joining Consol Energy in the development of their outstanding acreage position in the Marcellus," said Charles Davidson, CEO of the exploration and production company. "We have spent considerable time looking for the right entry point into the Marcellus and I believe, with Consol, we have found the perfect partner that we have been searching for."

TribLive commenting policy

You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.

We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.

While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.

We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments  either by the same reader or different readers.

We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.

We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.

We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.

We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.

Total Promotional Solutions

A division of Trib Total Media is your one-stop-shop for all of your branded merchandise needs.

We specialize in providing quality affordable promotional products for every type of business including non-profits, schools, universities, sports teams and more. With 1000’s of products to choose from, our knowledgeable staff can help you find the perfect apparel item or product to suit your needs and budget.

Digital Sales

We offer a wide variety of traditional and new digital advertising options customized to fit your needs!

Whether you're just starting out, or you've been a keystone in the community for years, our knowledgeable staff can provide you with a customized package including online banners/advertisements, Social Media Marketing (Facebook / Twitter), Website development, Search Engine Optimization, Email Marketing solutions and much more!

Contact your local sales rep today for details, personalized proposal and a meeting to discuss how we can meet your needs.